DNO adds to producing assets position offshore Norway

DNO ASA subsidiary DNO Norge AS has agreed to acquire stakes in five oil and gas fields in the Norne area in the Norwegian Sea from Vår Energi ASA for $51 million. As part of the deal, DNO will transfer its 22.6% stake in Ringhorne East to Vår Energi, the comapny said in a release May 8.

The deal includes an interest in four producing fields, Norne (6.9%), Skuld (11.5%), Urd (11.5%), and Marulk (20%), plus the ongoing Verdande development (10.5%). Prior to the transaction, DNO held interests in Marulk (17%), Alve (32%), and the ongoing Andvare development (32%).

With the deal, DNO adds more than 8 MMboe in reserves and resources. In terms of production, the transaction (net to DNO, including divestment of Ringhorne East) is estimated to add 3,000 boe/d to DNO’s output at closing, rising to above 5,000 boe/d in 2026 as the Verdande contribution kicks in.

“This transaction is another step in the rebalancing of our North Sea business on the heels of the acquisition of a 25% stake in UK’s Arran field announced in February,” said executive chairman Bijan Mossavar-Rahmani. DNO Exploration UK agreed to acquire the interest in the Shell UK Ltd.-operated gas and condensate field from ONE-Dyas (OGJ Online, Feb. 6, 2024).

Having produced more than 900 MMboe to date, all fields in the area are tied back to the Equinor-operated Norne FPSO that came onstream in 1997. Oil produced in the area is loaded from the FPSO to tankers for export, while the gas is exported by pipeline through the Åsgard Transport System. The Norne license has applied for lifetime extension until 2036.

The deal is expected to close in this year’s third quarter, subject to authorities' approval.

Rapid North Sea development

DNO said the deal creates a new core area for the company in the North Sea as it will hold interests in all producing and under development fields in the greater Norne area, including the Norne hub.

The company is pushing for quick commercialization of its recent discoveries in the area. In this year's first quarter, the Bestla development (39%) was approved by partners with startup in first-half 2027. Together with ongoing developments Andvare (32%) and Berling (30%), Bestla is expected to support a significant North Sea production increase by late in the decade, the company said as part of its earnings release May 8.

DNO completed of an appraisal well and sidetrack that further delineated the 2023 Heisenberg oil and gas discovery (49%), a new shallow play in the northern part of the Norwegian North Sea, now estimated to hold recoverable volumes of 24-56 MMboe. Oil-bearing sands were also encountered in a deeper secondary target, Hummer.

In January, DNO noted its awarded participation in 14 exploration licenses (three as operator), under Norway's Awards in Predefined Areas (APA) 2023 licensing round, bringing the company’s total holdings to 82 licenses offshore Norway (14 operated).

“Offshore discoveries in the North Sea and particularly in the Norwegian sector take significantly longer to bring to production than in other key oil and gas provinces," said Mossavar-Rahmani. “We not only address this by exploring near existing infrastructure but by acquiring bolt-on producing assets," he said. 

For the quarter, the Norwegian oil and gas operator had an operating profit of $61 million, 61% higher than the previous quarter, on revenues of $183 million. Free cash flow of $44 million was up 31% from fourth-quarter 2023.

Net production in first-quarter 2024 increased 14% from fourth-quarter 2023 and averaged 74,800 boe/d. The Kurdistan region of Iraq contributed 57,200 boe/d, the North Sea produced 14,200 boe/d, and West Africa contributed 3,300 boe/d.